PC effect: your EMIs may soon come down

There could be some good news for consumers planning to buy a house or a car. Equated monthly installments or EMIs may finally come down.

A day after finance minister P Chidambaram asked banks to reduce base rates, banks, both public and private, have started looking at ways by which lending rates can be brought down.

Base rate is the rate below which banks cannot lend.

While Bank of India has already reduced its base rate by 0.25% points, Canara Bank lowered its base rate by 0.30% points.

Most state-owned bank managements such as Bank of Baroda, Indian Bank, Indian Overseas Bank have decided to hold meetings with their asset liability committees (ALCO) — the risk-management committee in a bank.

ICICI Bank has also indicated that it may look into the issue.

“We would hold an ALCO meeting to decide on the base rate, I have already instructed my executive directors to work out ways to reduce the rate,” said TM Bhasin, chairman and managing director, Indian Bank.

M Narendra, chairman, Indian Overseas Bank, echoed the same sentiments. “We will have to find out how we can do it (reduce rates),” he said.

However, India’s largest lender, State Bank of India has said that its base rate was at a reasonable 9.7% and there was little room for a further cut. Private sector lender HDFC Bank with a base rate of 9.6% too indicated that it would not lower lending rate any more at this point.

“We have brought it down twice since December 2012 and there is no immediate plans now to revisit base rate,” a senior executive at HDFC Bank told HT.